The Wrong Medicine: NHS market reforms fail patients, citizens and taxpayers
Government reforms of the NHS over the last three decades have transformed a democratically controlled public service into an open, competitive market.
In our new report, The Wrong Medicine, the New Economics Foundation looks at the impact of pro-market reforms in the NHS from competitive tendering in the 1980s to the fundamental reorganisation set out in the 2012 Health and Social Care Act.
Reviewing evidence from the UK, as well as international comparisons, we can only conclude that markets in healthcare almost always fail patients, citizens and taxpayers.
The 2012 Health and Social Care Act is the latest and most extreme move towards markets in healthcare. Large profit-seeking organisations, many based in the United States, are now winning more and more NHS business. Lord Owen has warned that it could “create a fully marketised national health service”. Even senior Tories have called the Act the Coalition government’s biggest mistake.
A new trade agreement between the European Union and the United States (TTIP), due for completion next year, threatens to lock in private sector control of the NHS by inflicting heavy financial penalties on a future government trying to return health services to public ownership.
The costs of maintaining market mechanisms in the NHS have been conservatively estimated at £4.5 billion a year – enough to pay for ten specialist hospitals, 174,798 extra nurses or 42,413 extra GPs.
Not many people know this. Two in three people polled by Ipsos MORI said they knew little about changes being made to the NHS.
Most remarkably, the overwhelming weight of evidence suggests that markets are bad for healthcare. There is certainly no compelling evidence that market mechanisms or private ownership are more efficient or more likely to improve care for patients than a publicly owned, controlled and funded system.
In our report we found:
- market mechanisms have largely inconclusive or negative effects of quality and equity in healthcare
- no conclusive evidence that patient choice has made UK healthcare more responsive to patients or even more competitive
- the Private Finance Initiative has inflicted dangerously heavy long-term financial costs on NHS trusts without compensating savings or benefits
- despite the highest per person spending US healthcare ranks much lower than the UK’s in international comparisons. Poor performance is directly attributed to market mechanisms.
- markets in healthcare almost always fail patients, citizens and taxpayers. They function best when all parties can make fully informed choices, but patients rarely can.
- markets are not well-suited to encourage prevention of illness or more integrated health and social care. They depend on increased activity, which calls for more people getting ill and needing care. A healthy patient is not a source of income. Integration calls for high-trust, long-term relationships and willingness to share information, risks and rewards: these are not fostered in a competitive marketplace.
In short, market-based reforms are undermining the capacity of the NHS to maintain its world-class performance. And now it is desperately – and increasingly – strapped for cash. Public funds have been drastically cut as part of the government’s austerity drive, while demands for healthcare continue to rise.
The prevailing narrative is that health services are not working under state control: strong medicine is needed to save the NHS and that means more markets and more private sector providers. And the more it falls prey to financial pressures, the more easily the NHS can be described as a failing public institution – a problem begging for market solutions.
We can only conclude, then, that today’s NHS reforms are driven by ideology: a set of ideas that shape policy and – in this case – favour competitive markets with multiple, profit-seeking providers, over public institutions that aim to serve the public interest.
Instead, voters need to know why the NHS is in trouble and that markets are part of the problem, not the solution.